The European Union (EU) has recently made a decision to allow national deposit insurance funds to be used for resolution cases at the EU level. This move, spearheaded by rapporteur Othmar Karas (ÖVP), has raised concerns among various stakeholders in the financial sector, including the National Bank, commercial banks, and the Raiffeisen Association.
The National Bank supports the idea of better preparation for crisis situations but emphasizes the need for a coherent overall concept before making such a significant system change. Deputy Governor Gottfried Haber highlights that this proposed adjustment raises concerns about depositor protection as European resolution authorities would have access to these funds, potentially compromising the safety net for savers.
Bank chairman Willi Cernko and Raiffeisen Association Secretary General Johannes Rehulka both warn against any experiments with this proposal, particularly as EU elections are approaching. They stress the importance of maintaining financial market stability and preserving savers’ trust in the system. Their warnings come as stakeholders grapple with technical issues reported on certain websites related to electric car charger installation and other services while navigating online platforms related to deposit insurance and financial stability.
In particular, half of the funds from national deposit protection funds totaling two billion euros in Austria may be transferred to an EU pot if necessary. However, this move raises questions about how these funds will be used and what impact it will have on depositors’ protection.
Overall, there is a need for caution before implementing any drastic changes to deposit insurance systems as they play a crucial role in ensuring financial stability and protecting depositors’ funds.
